Between high interest rates and an uncertain economy, many investors are in wait and see mode these days.  If you’re like them, you’re waiting until next spring to see how the market looks before buying another property.  But just because you’re not buying right now doesn’t mean you can’t make moves to improve your portfolio. 

Here are 5 actions you can take now to optimize and recalibrate your portfolio so you’re prepared for your next transaction. 

1. Make Sure Your Reserves Are Adequate Across Your Portfolio

Now is a good time to make sure you have enough funds in your reserves and that you calculated them correctly.  It’s common to realize after owning a property for a while that what you initially calculated isn’t accurate. 

While we like to hope for the best, we also plan for the worst.  This ensures you’ll have enough cash on hand for your next investment without any unplanned expenditures for a property you already own. 

2. Perform Lendability Checkup

Do a credit check now to make sure you don’t have any surprises on your credit report.  Thanks to the Fair Credit Reporting Act, the federal government mandates that everyone is entitled to an annual credit check without any penalties to their credit score.  Go to AnnualCreditReport.com to get a free copy of your credit report. 

Doing this now gives you the chance to clear up any mistakes or pay a bill you weren’t aware of.  This also allows you to improve your debt-to-income ratio, which will make you more attractive to lenders. 

Taking care of your credit before you’re ready to buy helps ensure the next transaction will go smoothly.

3. Perform an Expense Audit for All Properties in Your Portfolio

When people are looking for ways to improve their monthly costs, they often just focus on their mortgage interest rate.  However, if you bought a property in the past few years, chances are you won’t be able to find a better rate in today’s environment.

Instead, look at all of the things you pay for every month and see where you can reduce expenses.  Call your insurance agent and have them run a cost comparison on different policies (making sure the coverage is adequate, of course).  Check how much you’re spending on trash removal and see if you can save a few dollars with another service—small amounts add up over time.  You can even check with your CPA about a cost segregation study to save you a non-cash expense. 

Another angle to evaluate are current market rents.  Landlords often forget to raise rents or simply don’t pay attention to rental trends.  If your rent is severely under market, you might want to look into ways to increase the rate closer to local trends. 

4. Take Care of Any Lingering Repairs or Improvements

When you’re not in acquisition mode, you have the time to look at your properties and see how you can improve them.  Do you have carpet you could replace with LVP flooring?  Consider the durability of your repairs and how they’ll reduce costs in the future. 

Make these repairs and improvements now, so you aren’t dealing with them while you’re in the middle of purchasing a property in the future.

5. Consider Any Additional Return on Investment Opportunities

If you have a tenant turnover coming up, evaluate your property and see if you have the ability to add value to it.  Maybe you have a basement rec room that could be converted into a bedroom.  Look for anything in your current property that could add extra income separately from just raising rent. 

It’s also important to pay attention to shifts in consumer preferences.  What are the things people are looking for now?  After covid, everyone realized how important it is to have space.  With so many people working from home, having an extra room for an office is in high demand. 

Having an in-demand rental property will boost your returns and can improve your portfolio drastically.

Evaluate and Improve Your Portfolio

These simple tips will not only improve your portfolio, they’ll put you in a better position to buy your next investment property.

If you need help figuring out your next move, reach out to us.  We can show you how to analyze your properties with our Property Llama software, and help you understand how to use the information to optimize your portfolio.  

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